Our relations have been developing quite well, particularly within the anti-terror coalition Russian President Vladimir Putin

Their talks also focused on the international war against terrorism with the Russian president saying the two countries could now co-ordinate their efforts.

"Our relations have been developing quite well, particularly within the anti-terror coalition," Mr Putin said.

It is the first visit to Russia by a Pakistani leader for 30 years, and Pakistani officials say they expect it to open an entirely new page in relations.

"I compliment you for the popularity you enjoy in the nation and the stature you enjoy as a leader of the world," President Musharraf told Mr Putin.

Correspondents say the trip is designed to challenge Russia's rock-solid relations with Pakistan's arch-rival, India.

Phone call

But on Tuesday, just hours before his meeting with President Musharraf, the Russian leader made a telephone call to his Indian counterpart, Atal Behari Vajpayee.

Indian media reports said the call was made to ease Indian concerns over the visit.

General Musharraf will concentrate on building commercial relations, including defence.

But he is also looking to explore ways to advance Mr Putin's offer to mediate in Pakistan's dispute with India over Kashmir.

"The possibility is there because Russia has good relations with India," General Musharraf told Pakistan television on Tuesday.

He is also due to meet other top Russian officials and business figures, including Foreign Minister Igor Ivanov.

Past conflict

General Musharraf's is the first official state visit by a Pakistani leader to Moscow since Zulfiqar Ali Bhutto in the 1970s.

Recent relations between the countries have been very poor.

They were at their worst during the Cold War, when Pakistan, backed by the United States, trained and armed the mujahadeen fighters who drove Soviet forces from Afghanistan in the 1980s.

Pakistan needs to keep pace in the arms race with India

Pakistan's support for the Taleban during the following decade did not do much to charm Moscow either.

Russia was fighting its own war against Muslim separatists in Chechnya.

Now Pakistan believes it is sending the right message to Russia, as a fellow member of the anti-terror coalition, established after 11 September.

Trade wanted

General Musharraf also wants to develop far stronger trading relations, which last year amounted to a miserly $100m.

In particular, he wants Russian arms.

BBC correspondent Paul Anderson in Islamabad says this is partly to reduce Pakistan's dependence on the United States, partly to counterbalance Russia's solid diplomatic and military relations with India.

The visit is a first, probably tiny, step in that direction, he says - Russia is not about to drop its long-time allies in Delhi.

They have just signed a $3bn military procurement deal and the Russians have long-term plans to develop a strategic regional relationship with China and India.

At this stage that does not include Pakistan.